Well-known innovative companies, like Minnesota Mining and Manufacturing (3M), that are successful share at least four fundamental characteristics: (1) Putting people and ideas at the heart of the management philosophy. (2) Giving people opportunities and latitude to develop, try new things, and learn from their mistakes. (3) Building a strong sense of openness, trust, and community throughout the organization. (4) Facilitating the mobility of talent within the organization. 3M believes in the power of ideas and individual initiative; and “recognizes that entrepreneurial behaviour will continue to flourish only if management is willing to accept and even applaud ‘well-intentioned failure’.” Innovation, the traditional hallmark of 3M’s business operations and success, is “a process that thrives on multiple, diverse, independent and rapid experimentation, in a failure-tolerant environment that values and accommodates constructive conflict.”

The creative and innovative orientation of 3M⎯and in particular a tolerance for failure or defects or errors⎯came under serious attack in late 2000. When former General Electric executive James McNerney took over as CEO of 3M in December 2000, he immediately began implementing Six Sigma. Management programs such as Six Sigma are designed to identify problems in work processes, and then use rigorous measurement to reduce variation, eliminate defects, and increase efficiency. When initiatives such as Six Sigma become embedded in a company’s culture, as they did at 3M, creativity and innovation can easily get squelched. In mid-2005, when McNerney departed 3M to take the CEO’s job at Boeing, he left his successors with the difficult question of “whether the relentless emphasis on efficiency had made 3M a less creative company.”

According to management guru Tom Peters, McNerney’s implementation of Six Sigma at 3M “more or less closed the lid on entrepreneurial behaviour.” Vijay Govindarajan, a professor at Dartmouth’s Tuck School of Business, observes that when more emphasis is placed on programs such as Six Sigma and Total Quality Management, the more likely it is that breakthrough innovations will be harmed. Art Fry, the inventor of 3M’s Post-It notes, says, “[y]ou have to go through 5,000 to 6,000 raw ideas to find one successful business” but the Six Sigma program would ask “why not eliminate all that waste and just come up with the right idea the first time?”

However, others have made the argument that Six Sigma should not be criticized indiscriminately. Six Sigma is argued to be very useful in reducing waste in virtually all processes where there is a known result that must be achieved.

Unfortunately, the deployment of Six Sigma at 3M was in an environment of innovation where the target is unknown. “The problem is not with the methodology itself but rather with how it is applied and what specifically it is applied to … if managed effectively, Six Sigma can absolutely co-exist with innovation.” Six Sigma can eliminate mundane, repetitive, and tedious tasks that impede creative thinking and innovation. Six Sigma focuses on efficiency and quality in order to enhance profits, but the lifeblood of long-term profitability for most, if not all, businesses is innovation. Indeed, “to compete in the coming decades, creativity is one process that can’t be left for later.” Still, “[t]urning ideas into commercial reality requires persistence and discipline, and overall effectiveness ultimately depends on top management being able to find the right balance between corporate creativity and efficiency.” Effective innovation “requires a delicate balancing act between play and discipline, practice and process, creativity and efficiency, where firms need to ‘learn how to walk the fine line between rigidity⎯which smothers creativity⎯and chaos⎯where creativity runs amok and nothing ever gets to market’.”

Robert Carter, a consultant at Raytheon, indicates that the Six Sigma process of define, measure, analyze, improve, control (DMAIC) can lead to overanalyzing the situation, which can be very detrimental when an idea begins to germinate. “Six Sigma tries to replace subjectivity with objectivity and intuition with data wherever possible. While this is appropriate for some operations⎯like administration, logistics, and manufacturing⎯it’s detrimental to exploratory research and design, which depend on subjectivity and intuition.” Creativity is seldom a logical process, and Six Sigma is not a panacea.

Discussion Questions
1. How would you describe 3M’s efficiency and creativity conundrum in terms of programmed and nonprogrammed decisions?

2. How would you describe 3M’s efficiency and creativity conundrum in terms of the rational, bounded rationality, and garbage can models of decision making?

3. What role do intuition and creativity play in the decision making that is evident in A3M’s efficiency and creativity conundrum?